Cost of postage may rise to 33 cents

December 23, 1993|By New York Times News Service

WASHINGTON -- Even as Americans jam post offices to finish their holiday mailing, the Postal Service is working on a rate proposal that could raise the cost of a first-class letter to as much as 33 cents

Postal Service officials said yesterday that they needed to raise rates in 1995 for the service to break even, as it is required to do over a period of years. And because of the cumbersome process any increase entails, the service must make its request early in 1994, officials said.

Among plans they are considering is an innovative across-the-board increase of 10.3 percent, which would add three cents to the cost of a first-class letter, the officials said. The idea is supported by businesses that make heaviest use of the mail.

The Postal Board of Governors will discuss the rate increase at a Jan. 3-4 meeting here.

"There are several options they are considering, but there is no final decision at this point," said Robert Hoobing, a spokesman.

Whatever form the rate change takes, Postmaster General Marvin T. Runyon has said that he wanted to keep any rise under 14 percent, a cap that would put maximum first-class postage at 33 cents. The 14 percent figure, Mr. Hoobing said, is the estimated rate of inflation for the four-year period beginning in February 1991, when rates last went up, that time by four cents to 29 cents.

It would be the first increase of the first-class rate under Mr. Runyon, who took office in July 1992 with a pledge to break the service's tradition of raising that rate every three years. That tradition began in 1971, when the service was made a quasi-independent agency subject to congressional oversight.

"There has to be an increase, because we haven't had one in four years," said Norma Pace, an economist on the board of governors. "We have to have a rate increase for 1995 to help us break even." The Postal Service, which generates revenues of $43 billion a year, is expecting a loss exceeding $1 billion for the fiscal year ending in September, Ms. Pace said.

The independent Postage Rate Commission, will have 10 months to evalute any rate proposal.